AHIP's "Plan" Doesn't Pass the Sniff Test

I’m no Ted Kennedy.

When the American Health Insurance Plans (AHIP), the trade association for the private insurance industry, released their own plan for health care reform under the name “Now Is the Time for Health Care Reform,” the Senator who has made health care for all the cause of his career, greeted the “plan” warmly and graciously.  “There’s a spirit of optimism about our work to ensure quality, affordable health care for all Americans - and today’s announcement adds to that optimism,” he said in a statement. “The insurance industry has advanced serious proposals that deserve serious analysis and consideration.”

Unfortunately, the more you give the plan – which reads less like a list of “plan” of solutions and more like a list of problems -- the serious analysis Kennedy recommends, the more cynical you become.  This is a vision of reform all right – one that assigns responsibility to the government, the individual, the physicians – anywhere but to the insurance companies themselves.  As such, it just doesn’t pass the sniff test.

Look, the insurance companies clearly get it.  Whether it’s the recent upsurge in support for single-payer, or the public competitor model championed so consistently by Obama during the election, they know the mood in the country is such that they either need to come to the table or be served on it.  I even have to congratulate the author of the report for channeling his or her internal Jon Favreau with great lines about shared sacrifice in tough times, like “Although health care reform ranks high on the nation’s to-do list, achieving the broad goals of universal access, affordability, and cost containment – in ways that are fair to all Americans – will require dedication and commitment on the part of everyone with a stake in the outcome.” Sounds great, doesn’t it?  Well, let’s see how that dedication breaks down for each stakeholder in AHIP’s vision.

The Government

Federal government, we’re totally with you that health care has to change.  So here are our suggestions.  First, find a way to cut $500 billion of health care spending each year through eliminating waste and fraud, and reforming the thicket of state medical liability regulations with one massive federal reform.  Then, figure out why costs vary from region to region… and stop doing that.  Figure out a way to streamline administrative costs for your public programs – maybe by using a uniform method for explaining coverage and costs (but we wouldn’t recommend using the Medicare public price information for that.  “Change” means you guys build something totally new, not use the information you already have!  And speaking of new approaches, how about you leave the private insurance industry administrative costs alone.  Deal?  Deal!)

Convince all doctors to change their method of reimbursement away from fee-for-service and towards reimbursement by health outcomes.  We’re sure they’ll love that.  While you’re at it, we suggest you come up with some cash for medical students looking to go into primary care, as well as some serious medical school debt loan forgiveness.  How about some more investment in research – you know, start from scratch and figure out what the best treatments are, and then be responsible for doctors doing those treatments and not just prescribing the latest drugs?  We also highly recommend you guys promote healthy lifestyles to individuals and communities at risk.  We like healthy customers in our plans – how about you help get us some?

Come to think of it, a major investment in health infrastructure, including Health IT would probably help.  As would a complete federal regulation framework that overrules any state regulations (you ask us, the Supreme Court looks a little bored these days – let’s give ‘em a thrill!) As would creating an “essential benefits package” so everyone knows the minimum they need in order to be covered – you guys tell us what needs to be in it, and we’ll sell it.  And while we’re at it, small business have no negotiating power with us for lower prices.  Why don’t you give them a lot of tax subsidies so that can pay us our normal rates?

Lastly, let’s make an individual mandate so everyone is forced to buy our products.  We’re totally with you on this.  Just tell us what the minimum benefits that everyone has to be, force them to buy it, give us subsidies if the customers can’t afford the costs themselves, and we’ll agree to sell it.  That should do it.  No need to expand Medicare, no need for a public competitor.  You just make everyone buy insurance, and everyone will be covered.  Problem solved!

That’s a lot for the government to do.  You’ll also notice these are the toughest choices in our health care reform debate, and the ones that are the hardest and most intractable to solve.  This will doubtless be a surprise to the “no to socialism guys,” but AHIP says that government is almost single-handedly the solution.  The sentiment here appears to be, “Go for it guys!  We’re right behind you!  I mean, that’s where we’ll be… behind you.”

Individuals

You need to buy insurance.  That will stop all of you people from being uninsured.  Done and done.  If you can’t afford it, talk to the government.  They’ve agreed to pay us for you... well, part of the way, anyway.

Also, when you’re getting treatment, you should have the information on what it’s supposed to cost.  You should stop basing your decisions on what your doctor recommends and start basing them on the bottom line (after all, that’s what we do.)  If you spend too much, well, that’s probably your fault.

By the way, those of you with high blood pressure, or who are cancer survivors, or have treatable illnesses like diabetes – well, we’ve got a little surprise for you.  Stay tuned.

Doctors

You should change the whole structure of the way you get paid away from fee-for-service and towards coordinated care, and “by linking payment to uniform performance measures that can be fairly applied to all health care providers.”  Think of it as “No Doctor Left Behind.”

On our end, we’re probably not going to change our administrative process, so you’re going to still need all those workers who can become experts on what we do and do not cover, but we’ll be a lot more open about how we’re not helping you.

The Insurance Industry

One the government has figured out how to cut health care spending, we’ll follow your lead. Probably.  [It’s hard to forget that AHIP has been outspoken that Medicare and government programs underpay, “forcing” them to pay more to hospitals and doctors in what they call a “cost-shifting surtax.”  Curiously, if you ask doctors and hospitals, they’ll tell you that they’re also stiffed by most insurers, who pay no more than 70-80% of the “usual and customary” rate.  In any case, the trend appears to be insurance companies complaining about lower spending from public programs more than following their lead.]

Once government has used the public programs to even out regional variances, we’ll their lead (well, presuming the new cost shows up in our Ingenix database at a “usual and customary” price.  Otherwise, we probably won’t.)

On administrative costs, “we recognize the need for our industry to come to the table with proposals for how we can do our part.”  But a policy paper is no place for proposals.  We’ll do that later.  For right now, we promise to eventually build a system that presents information on costs and coverage in a uniform way. Because Lord knows we don’t have that now (ignore that Ingenix database) and neither do you (ignore that Medicare reimbursement are public information.)  What’s that?  According to the records kept by the Centers for Medicare and Medicaid, 14.1 % of the costs for those with private insurance go to administration costs, compared to 3.1 % for Medicare?  I don’t see how that’s relevant, young man.  We’re talking shared sacrifice here, not our sacrifice.

We also promise to end the practice of denying coverage based on pre-existing conditions.  It’s guaranteed issue, baby – if someone comes to us and wants to buy insurance, we’ll sell it, particularly if the government makes everyone buy it and agrees to pay for the difference between what you can afford and what we charge.  This is what you’ve been waiting for, guys.  See, shared sacrifice.  (What’s that Ezra Klein? Oh no, we didn’t mean we’d sell our policies at a standard rate.  No, you’ll probably have to pay a lot more if you have a pre-existing condition.)

Giving It One More Sniff

Look, plenty of these ideas are admittedly useful ones, and elements of them can be found in just about every health care plan a progressive has ever proposed.  If you go down the list in the “government” section in particular, you’ll find a laundry list of items that need to be part of the solution.  Context counts, though.  When it’s Barack Obama saying, “We should do this, and we should do that,” it’s a very different experience when someone else’s plan is “You guys should do this, and you guys should do that.”

With apologies to Ted Kennedy, it’s hard not to be cynical when you see who’s responsible for what in AHIP’s proposals.  The population that has to change their behavior the least is AHIP.  Sure, they might make good on their promise to follow the government’s lead in cutting costs, but the insurance business model doesn’t make money on expensive care in the first place.  They make money by collecting premiums from those who don’t need care at all and using it to pay for those who do need care.   That’s not going to change if you shift from fee for service to another form of compensation for providers, and it’s not going to change if government does a lot of heavy lifting to make people live healthier lives – actually, that will just increase the number of profit-making customers they’ll have.

When AHIP released their plan, the concession of the “pre-existing condition” practice made all the news stories as proof that this was a serious proposal.  But let’s face it – discriminating against those who are likely to actually need health care is amoral at best.  The way the companies have practiced it – going so far as to reject people based on family history or long-ago events, discriminating against children with treatable ailments like asthma and diabetes and, in some cases, denying coverage based on the suspicion of pre-existing conditions rather than their actual existence – crosses the line into immoral.  It’s not negotiating to give up your least defensible practice… especially when they reserve the right to sell at a mark-up they deem appropriate.

I’ve looked through this document a number of times (as have others), and I don’t see any suggestions about how the bloated insurance industry will change that’s in any way comparable to what they ask of the government, individuals and doctors.  It’s not shared sacrifice when everyone except you has to completely change the way they do business.  It just stinks.

(Photo credit:  santheo on Flickr.)